The powers inherited by the merged HM Revenue & Customs (HMRC) were unaligned and out of date. HMRC and its customers wanted a more tailored approach which allowed any ’checking’ action to respond to the particular circumstances in each case, to include the nature of the risk. To reflect this, new powers and a consistent set of safeguards are being introduced. These will apply for SDLT in respect of returns made on or after 1 April 2010.

What changes in April 2010?

The new legislation provides HMRC with:

• one set of powers to inspect business records, assets and premises
• a non-appealable right to require production of statutory business records
• a new power to correct obvious errors in a tax return based on information held by HMRC
• a single approach across all taxes to asking taxpayers and third parties for supplementary information, based on formal information notices with a right of appeal

The legislation also makes some changes to the way HMRC must carry out compliance checks, including

• a ban on inspecting purely private dwellings without consent
• a requirement for HMRC to give at least seven days prior notice of a visit, unless either an unannounced visit is necessary, or a shorter period is agreed
• a new requirement that unannounced visits must be approved beforehand by a specially trained HMRC officer
• a requirement on HMRC to act reasonably
The new penalties for inaccuracies will be extended to most taxes for return periods starting on or after 1 April 2009, for documents that are due to be filed on or after 1 April 2010.
• HMRC is also introducing one consistent penalty system across most taxes when people fail to notify a new tax liability or a new activity on which tax is due.
• under the new system, if you take reasonable care to get your tax right, HMRC will not penalise you, even if you make a mistake.

What changes in April 2011?

The legislation makes some changes to the way HMRC must carry out compliance checks, including
• a new four year time limit for assessments and claims
• reductions in extended assessment time limits
Where can I find out more?

Website: New Compliance Checks
www.hmrc.gov.uk/compliance/faqs.htm

Website: Briefing on new penalties
http://www.hmrc.gov.uk/about/new-penalties/faqs.htm

Website: New penalties for errors on tax returns and documents
http://www.hmrc.gov.uk/about/new-penalties/index.htm